Chapter 6: Organisation culture and

committees
Topic list
6.1. Organisational departments and functions
6.2. What is culture ?
6.3. Organisation culture
6.4. Culture and structure
6.1. Organisational departments and functions
R&D

Service
operations Purchasing

Finance ORGANISATION Production

Human Marketing
resources

Administrat
ion
 6.1.1. Research and development

ØResearch may be:

ü Pure: to obtain new scientific or technical knowledge
ü Applied: specific practical aim or application
ü Development: to use existing scientific and technical knowledge to
produce new products or systems
ØProduct research: to create new product to the market
ØProcess research: to improve the way in which those products/services are
made or delivered
ØR&D should be closely co-ordinated with marketing
 6.1.2. Purchasing
• Purchasing: is the acquisition of material resources and business services
for use by the organisation
• Importance of purchasing
• Cost to the firm
• Quality of inputs will impact quality of outputs
• Strategy: what to purchase and what to resale
Position of purchasing within the organisation
• Board of directors are responsible for strategic purchasing
• Purchasing officer is responsible for raw materials and must liaise
(connect) with the finance department
 6.1.2. Purchasing
• The purchasing mix:
Quantity: impact the inventory level and cost of inventory holding
Quality: quality of inputs should be meet the production requirements
Price: best value in consideration of quality, delivery, urgency of order
Delivery: impact the inventory control and production planning
• Purchasing and profits
Obtains the best value for money
Meet quality targets
Minimise inventory holding costs
 6.1.3. Production
ØProduction functions:
- Obtain inputs to production system
- Adding of value including:
Scheduling jobs on machines
Assigning labor to jobs
Control quality of production
Improving methods of works
Managing materials and equipment to avoid waste
Create outputs
ØProduction management decisions
Long term: setting up the production system
Short term: Running and controlling the system
ØRelationships with other functions:
Product design – R&D
Job design – H&R
Quantity needs – Sale/purchase
Capital expenditures - Finance
 6.1.4. Service operations
vThe nature of services:
ü Intangibility: No substantial material or physical aspects to a service
ü Inseparability: Many services are created at the same time as they are
consumed.
ü Variability: Quality of service depend on who (or what) delivers the service
and exactly when it takes place
ü Ownership: Not result in the transfer of property

vImplications of service provision:

ü Poor service quality on one occasion lead to widespread distrust of
everything the organisation does
ü Complexity
ü Pricing - might be complicated if there are several providers
ü Human resources management
 6.1.5. Marketing
+ Function – to manage an organisation relationships with its customers
+ Models of marketing
• Sales support: Support direct sales such as telesales, response to client’s
queries
• Marketing communications: promote the business image and its products at a
tactical level
• Operational marketing: to support the organisation with a co-ordinated range of
marketing activities including market research, brand management, corporate
communication etc.
• Strategic marketing: to contribute to the creation of competitive strategy
 6.1.5. Marketing
• Marketing strategy and corporate strategy: closely linked
- Corporate strategy plan: aim to guide the overall development of
organisation
- Marketing plan:
-> subordinate to the corporate planning
• Marketing orientation
üProduction orientation: customer will buy whatever we produce
üProduct orientation, a variant of production orientation:
Add more features to the product – demand will pick up
üSales orientation – customer orientation
=> Marketing orientation: analyse the market to provide the desired
products/services
 6.1.5. Marketing
Satisfying customer needs: the marketing mix
A set of controllable variables and their levels to influence the target
market, including 4Ps (product, price, place and promotion)
- Product: what is being sold
Design, features, quality and quantity, packaging, safety, etc.
- Place: outlets and logistics
- Promotion (marketing communication)
Objectives: Awareness of products, interest in products, desire to
buy and action to buy
Types: Advertising, sale promotion, direct selling, public relations
- Price: set price to cover costs, retain image, and against the competitors
 6.1.5. Marketing
• Service marketing (additional 3 Ps)
People: Who deliver the services
Processes: How is the service delivered
Physical evidence: to be consistent with the desired image
• The ideal marketing mix – proper balance between each of these
elements (4Ps)
• Marketing segmentation:
When market can be broken up into different segments
Mass marketing – ignore marketing segment
 6.1.6. Administration
+ Administration function is normally centralised at head office as much as
possible
+ Advantages:
- Consistency
- Give better security and control
- Head office is better to know what is going on
- Economies of scale
+ Disadvantages
- Local office might have to wait for HQ instruction
- Reliance on head office – Difficult to encounter local issues
- System fault will impact across the organisation
 6.1.7. Finance
+ Finance function
Raise money
Recording and controlling
Providing information to managers
Reporting
+ Importance of finance
Financial management
- Investment decision
- Financial decision (e.g how to pay for investments)
- Dividend decision
- Operating decision
Management of finance – handling cash, invoice and other finance
documents for recording (book keeping)
 6.1.7. Finance
• Financial accounting:
- Recording financial transactions – book keeping
- Reporting to shareholders
• Treasury management
+ Plan and control the sources and uses of funds
- Cash budgeting
- Bank overdraft facility
- Repayment of borrowings
- Cash flow monitoring
- Cashier’s duties
- Deal with foreign currency issues
• Working capital and other matters
Consist of: cash, account receivable, account payable and inventory
Matters: irrecoverable debts, overdraft finance, suppliers payments, inventory
turnover etc.
 6.1.7. Finance
+ Management accounting information
- Planning: budget & forecasts
- Decision making:
- Control – actual vs budget / actual vs cost norms
+ Strategic planning
- Ensure that finance is available
- Integrate the strategy into budgets
- Establish the performance measures
- Establish priorities
- Assist the modelling process
 6.1.8. Human resources
+ Human resource management – deal with organisation, staffing levels,
motivation, employee relations and services
+ Objectives
- To develop an effective human component
- To develop human resources as required by organisation and motivate
them
- To create and maintain co-operative relationships
- To meet organisation’s social and legal responsibilities
+ Why is HRM important
- To increase productivity
- To enhance group learning
- To reduce staff turnover
- To encourage initiatives
 6.1.8. Human resources
+ The HR plan:

v Recruitment

v Retention

v Downsizing

v Training and retaining to enhance the skills base

 6.2. Culture
+ What is culture? Culture is collective programming of the mind which
distinguishes the members of one category of people from another (ways of
behaving, understanding) - Hofstede
Category (“group”)
- Nation, region or ethnic group
- Women vs men
- A social class
- A profession of occupation
+ Elements of culture (Edgar Henry Schein)
- Observable behaviour
- Underlying values and beliefs of observable elements
- Hidden assumptions
 6.2. Culture
Elements of culture – by Schein – Iceberg
+ Behaviour and attitudes:
- Behaviour:
- Artefacts: eg, design of office
- Attitudes:
+ Professed culture:
- values and beliefs: eg, slogan/ mission statement
+ Assumptions (inbuilt and shared beliefs and values)
- Foundation ideas: ways of thinking and behaving
 6.3. Organizational culture
Definition
- The collection of traditions, policies, beliefs and attitudes that constitute
a pervasive context for everything we do and think in an organisation – by
Mullins
- A pattern of beliefs and expectations shared by the organisation’s
members, and which produce norms which powerfully shape the behaviour of
individuals and groups in the organisation – by Schwartz & Davies
- The way we do thinks around here
 6.4. Culture and structure
Four types of culture (by Harrison) (Charles Handy)
+ Power (Zeus) is shaped by one individual (owner, founder)
- Capable of adapting quickly to meet change
- Power decrease if the organisation is bigger
+ Role (Apollo) is a bureaucratic culture shaped by rules, procedures
- Formal structure, well-established rules and procedures
- People are required to perform in line with rules
+ Task (Athena) is shaped by a focus on outputs/results
- Applicable in project teams
- Performance is judged by results
+ Existential or person culture (Dionysus) is shaped by the interests of
individuals
- Organisation culture is to serve the interests of individual within it
ORGANIZATIONAL
CULTURE
BY HARRISON (1993)
DISADVANTAGES AND ADVANTAGES OF POWER DIMENSION
DISADVANTAGES AND ADVANTAGES OF ROLE DIMENSION
DISADVANTAGES AND ADVANTAGES OF ACHIEVEMENT DIMENSION
DISADVANTAGES AND ADVANTAGES OF SUPPORT DIMENSION
 6.4. Culture and structure
+ The impact of national culture (Hofstede model)
- Four main dimension of difference between national cultures
- Power distance – unequal distribution of power is accepted
High - accept greater centralisation, top-down chain
Low - expect less centralisation and flatter structure
- Uncertainty avoidance
High – respect control, certainty and ritual
Low – respect flexibility and creativity
- Individualism
High – emphasise autonomy and individual choice and responsibility
Low – emphasise interdependence, reciprocal obligation and social
responsibility
- Masculinity – social gender roles are distinct
High – clearly differentiate gender roles
Low – minimise gender roles